State pension top-up plans to be unveiled

Category:
Pensions

Updated:
27/01/2014
First Published:
27/01/2014

MONEYFACTS ARCHIVE

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A top-up scheme that will give retirees the chance to boost their income has been on the cards for several months now, but the finalised plans are due to be unveiled later today – giving pensioners the opportunity to increase their state pension by up to £25 per week.

The scheme will be open to those who have already reached state pension age or who will do so by April 2016 (before the new higher flat rate state pension comes in), allowing them to make additional top-up payments to boost their contributions and therefore the amount of retirement income they'll receive for the rest of their lives.

Under the plan, individuals will be able to pay in from £900 up to a maximum of £25,000 (although this figure is yet to be confirmed), and in doing so will increase their weekly state pension by some £1 for every £900 paid in.

The measures have been designed to help women and the self-employed in particular. Women historically receive less state pension than men, largely because of reduced earnings and career breaks which lead to gaps in National Insurance contributions, while the self-employed are currently only entitled to a basic state pension.

The scheme could be a welcome boost to a lot of retirees, and after its unveiling later today it will be formally launched over the coming weeks. But, there's a limited window of opportunity for retirees to make top-ups, with the scheme set to be officially open for just 18 months from October 2015.